employee would be required to enter into an agreement specifying the kind and amount of compensation for a service invention, before grant of a patent. Where an agreement could not be reached, the matter would be referred to an Arbitration Board to be established in the Patent and Trademark Office. With respect to foreign countries where the employer does not file a patent application on a service invention, the employer would be required to release the invention to the employee.

Section 431 would require employees also to give prompt notice to their employers of the making of a free invention, and would permit employers to contest whether such invention was a free invention by filing a written declaration within three months of notice. Disputes would again be referred to the Arbitration Board.

Section 438 would preclude any adverse action against employees who instituted actions or filed complaints to receive the rights accorded them under H. R. 3285. Violations would be investigated by the Secretary of Labor who could bring a civil action against the appropriate person in a United States district court.

Mr. Chairman, I strongly believe that organizations should have awards programs to stimulate invention and innovation by their employees. I am well acquainted with the awards program of NASA and believe that many corporations also have generous programs to reward deserving inventors.

NASA has direct authority under section 306 of the National Aeronautics and Space Act of 1958, as amended, 42 U.S.C. 2458, to grant monetary awards for scientific and technical contributions to NASA's activities. This authority is not limited to patentable inventions, but is applied to all employee inventions for which a patent application is filed. Evaluation factors include the creativity and significance of the invention, its actual or expected use by NASA and other agencies, and commercial use and potential. minimum award is always given, and a number of much more substantial

A

awards have been made under this authority for both patented inventions and other contributions. The NASA program has worked well, and there is no reason to expect it will not continue to do so.

The Secretary's Report to the President and Congress on the Stevenson-Wydler Act calls for the development of incentives for Federal employees. But since the laws and regulations that apply to Federal employees are unique, we believe their incentives should be developed in that context, not in legislation applying to all inventors, such as H. R. 3285 and H.R. 3286.

For all these reasons I do not favor the creation of a system such as that contained in H. R. 3285. Even my cryptic explanation of the bill reveals the administrative complexities and burdens it would impose on both industry and the Government. The costs of implementing H.R. 3285 would be particularly unfortunate for small, innovative firms which could ill afford to divert their limited resources to comply with its many requirements and deadlines.

I am concerned that H.R. 3285 would retard the free flow of information among employees of companies. An employee may be hesitant to share the results of his or her research with a co-worker for fear that the co-worker may make an improvement or even a separate invention, either of which possibilities would reduce the potential compensation to the first employee. when the United States needs more invention and innovation to compete in world markets, we cannot afford unnecessary barriers to creativity in our corporate and Government laboratories.

At a time

I am also concerned that the system which would be established under H.R. 3285 would not take appropriate account of the contributions made by others in the organization which affect the value of a service invention. Directors of research laboratories who chart the course and direction of employees' efforts, production engineers who translate laboratory prototypes into marketable products, and marketing personnel who design and direct advertising campaigns

which create demand for new products are among those in corporate settings whose contributions frequently approach that of the inventor. Failure also to recognize such contributions could be

counterproductive.

Finally, Mr. Chairman, it seems to me that in view of the sweeping definition of a "service invention" in H. R. 3285 employees could actually receive title to fewer inventions under that bill than they would under either H.R. 3286, Executive Order No. 10096, or the State laws that I have mentioned.

H.R. 4525

H.R. 4525 would clarify an inventor's right to receive a patent by specifying in 35 USC 103 that:

"Prior art shall not include unpublished information which is developed by the applicant singly or jointly with others, or which is known to the applicant only by virtue of his or her employment."

Prior art is the existing technical information against which the patentability of an invention is judged. Publicly known information is always considered in judging whether an invention is obvious. But a complex and growing body of jurisprudence (begun by In re Bass, 59 C.C.P.A. 1342, 474 F.2d 1976, 177 U.S.P.Q. 178 (1973), and continued in large part by its progeny, including In re Clemens, 622 F.2d 1029, 206 U.S.P.Q. 289 (C.C.P.A. 1980)) regards unpublished information within an organization as prior art if an inventor was aware of it. If unknown to the inventor, however, the same organizational information would not be taken into account in judging nonobviousness. As a consequence, scientists or researchers unaware of such secret organizational information have a better chance of obtaining a patent than those to whom it was known.

We are concerned that this body of jurisprudence will discourage the communication of technical information among scientists and researchers in an organization. It is therefore counterproductive and should be reversed if the efforts of corporate and team research are to be fairly rewarded under the patent system. Neither research laboratories nor technology-oriented businesses conduct research and development in a vacuum. New technology is often developed on the basis of background scientific or technical information known within the organization but unknown to the public. And productive research usually depends on the continuing development and communication of this secret information among researchers and scientists. Inventions are far less likely to arise from isolated research efforts by those unaware of available background technology and out of communication with others in the organization.

Thus, we believe that a change in the patent laws is needed to assure that unpublished technical information not be regarded as prior art in judging nonobviousness, if that technical information is developed by the patent applicant alone or in collaboration with others, or obtained by the applicant from co-researchers during the course of employment.

Drafting an appropriate provision, however, has proven to be an elusive and complex task. H.R. 4525 is too broad. It is not limited, for example, to exchanges of background information among co-workers in a single organization. Information learned from or transmitted to outsiders could be disqualified as prior art.

Concerned patent law organizations have devoted much effort to the development of a provision that reverses this body of jurisprudence without upsetting other legal principles. We understand that on March 15, 1984, the American Intellectual Property Law Association (AIPLA) forwarded to you, Mr. Chairman, proposals for amending sections 103, 116 and 120 of title 35. We believe that the amendment of section 103 along the line proposed by AIPLA appears to have the potential of overcoming the problems created by Bass and

its progeny in the corporate context.

It also may be useful in solving the difficulties addressed by H.R. 4527. I will comment on this and AIPLA's suggestions for amending sections 116 and 120 in my discussion of H.R. 4527.

H.R. 4527

This bill would amend 35 USC 116 in regard to the naming of inventors. Section 116 has been asserted by many to require that the invention defined in every claim in an application be invented by all of the named co-inventors. Complying with this requirement is sometimes difficult and at times impossible.

Scientists or researchers in an organization often work on a particular aspect or embodiment of the invention, or on only a portion of the invention, while others work on different aspects, embodiments or portions. Scientists are continually added to a research team, while other scientists leave the team. Concepts and development plans generated through brainstorming cannot always be accurately attributed.

The preparation of patent applications for inventions resulting from team efforts such as these nevertheless requires the attorney to determine the inventorship of each claim to be included in the application. Adequate protection for an invention may require the filing of several applications to cover the separate contributions to all of its aspects, embodiments and portions. Some inventorship problems would require the filing of separate applications that may not be separately patentable. To do otherwise risks noncompliance with 35 USC 116, thereby jeopardizing the rights of all the inventors. These requirements seem especially hypertechnical when in most cases a single organization owns patent rights from all the contributors to the invention.

Admittedly, good faith errors in the naming of inventors, either in an application or a patent, may be corrected. Nonetheless, it is